Autodesk, Inc. (NASDAQ: ADSK)

Autodesk, Inc. operates as a design software and services company worldwide. Autodesk, Inc. also sells consumer products for digital art, personal design and creativity, and home design in various digital storefronts and over the Internet. The company licenses or sells its products to customers in the architecture, engineering, and construction; manufacturing; and digital media, consumer, and entertainment industries directly, as well as through a network of resellers and distributors. Autodesk, Inc. was founded in 1982 and is headquartered in San Rafael, California.

Take a look at the 1-year chart of Autodesk (NASDAQ: ADSK) below with my added notations:

1-year chart of Autodesk (NASDAQ: ADSK)

ADSK has been trending lower for the past 8 months. Over that time, the stock has formed an important trend line of resistance (red). Any (2) points can start a trend line, but it’s the 3rd test and beyond that confirm its importance. ADSK’s trendline resistance currently sits right around $52.

Now that ADSK has hit its trendline again, the stock may be pulling back down to its $50 support (green).

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The Tale of the Tape: ADSK is currently stuck under a down trending resistance. A break above that resistance should mean higher prices, thus a long trade could be made either then, or on a fall to the $50 support. Short traders might look to enter a trade at the resistance or on a break of support.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT

Follow me on Twitter: @cmtstockcoach